TOKYO (Reuters) – Toshiba Corp (6502.T) will not use the option of cancelling the $18 billion sale of its memory chip unit unless there is any “major material change” in circumstances, the Japanese conglomerate’s new chief executive said on Tuesday.
Toshiba was unable to complete the sale to a consortium led by U.S. private equity firm Bain Capital LP by the agreed deadline of March 31 as it was still waiting for approval from China’s anti-monopoly regulator.
Under the agreement, Toshiba now has the option to cancel the sale without forfeit. Cancelling would give Toshiba the freedom to pursue alternative courses of action, such as renegotiating the sale or conducting an initial public offering – a move activist shareholders have urged Toshiba to consider.
“We will maintain our stance and wait (for Chinese regulatory approval) unless drastic changes occur,” Nobuaki Kurumatani told reporters. Toshiba aims to complete the sale as soon as possible, he said.
Asked what was meant by drastic change, he cited the failure to receive Chinese regulatory approval or some unforeseen situation involving the consortium.
He declined to comment on any plans should the deal fail to receive approval by Toshiba’s annual shareholders’ meeting in June.
Kurumatani this month became the first outsider to lead Toshiba in half a century. The conglomerate is working to recover from the worst years in its 142-year history, after a $1.3 billion accounting scandal beginning in 2015 and the bankruptcy of its U.S. nuclear power subsidiary in 2017.
A former banker who headed the Japanese arm of private equity firm CVC Capital Partners, Kurumatani is equipped with a network of personal connections which includes politicians, bureaucrats and finance industry executives.
He said he aimed to compile a five-year turnaround plan by the end of 2018 after reviewing Toshiba’s business portfolio.
The chip business currently accounts for most of Toshiba’s profit, while the conglomerate has struggled to grow other core businesses such as social infrastructure. Under the sale agreement, Toshiba plans to repurchase 40 percent of the unit.
Kurumatani said he aims to shift Toshiba’s focus to service-oriented businesses that integrate manufacturing with digital technology.
“Simply supplying products is a business model of the 20th century,” he said.